Policy Briefing NJ s Complicated Affordable Housing Policies: Considering the Alternatives October 17, 2014, Thomas Edison College, Trenton, NJ What Affordable Housing Policies Make Sense for New Jersey? David N. Kinsey, Ph.D., FAICP, PP 1
2
1. What s the problem? 2. What are some alternatives? 3. What principles should guide choosing NJ s new approach? 4. What makes sense for NJ in 2014? 3
What s the problem? Problem #1: Insufficient decent housing affordable to low and moderate income households and individuals Problem #2: Insufficient variety and choice of housing, including housing affordable to low and moderate income households 4
What s the definition of low and moderate income? NEW JERSEY COUNCIL ON AFFORDABLE HOUSING 2014 AFFORDABLE HOUSING REGIONAL INCOME LIMITS Region 1 Median $59,095 $63,317 $67,538 $75,980 $84,422 $87,799 $91,176 $97,930 $104,683 $111,437 Bergen, Hudson, Passaic and Sussex Moderate $47,276 $50,653 $54,030 $60,784 $67,538 $70,239 $72,941 $78,344 $83,747 $89,150 Low $29,548 $31,658 $33,769 $37,990 $42,211 $43,899 $45,588 $48,965 $52,342 $55,719 1.8% 0.00% Very Low $17,729 $18,995 $20,261 $22,794 $25,327 $26,340 $27,353 $29,379 $31,405 $33,431 Region 2 Median $63,430 $67,961 $72,492 $81,553 $90,614 $94,239 $97,864 $105,113 $112,362 $119,611 Essex, Morris, Union and Warren Moderate $50,744 $54,369 $57,993 $65,242 $72,492 $75,391 $78,291 $84,090 $89,890 $95,689 Low $31,715 $33,980 $36,246 $40,777 $45,307 $47,120 $48,932 $52,556 $56,181 $59,806 1.8% 0.00% Very Low $19,029 $20,388 $21,747 $24,466 $27,184 $28,272 $29,359 $31,534 $33,709 $35,883 Region 3 Median $73,500 $78,750 $84,000 $94,500 $105,000 $109,200 $113,400 $121,800 $130,200 $138,600 Hunterdon, Middlesex and Somerset Moderate $58,800 $63,000 $67,200 $75,600 $84,000 $87,360 $90,720 $97,440 $104,160 $110,880 Low $36,750 $39,375 $42,000 $47,250 $52,500 $54,600 $56,700 $60,900 $65,100 $69,300 1.8% 0.00% Very Low $22,050 $23,625 $25,200 $28,350 $31,500 $32,760 $34,020 $36,540 $39,060 $41,580 Region 4 Median $64,830 $69,461 $74,091 $83,353 $92,614 $96,319 $100,023 $107,432 $114,841 $122,250 Mercer, Monmouth and Ocean Moderate $51,864 $55,568 $59,273 $66,682 $74,091 $77,055 $80,018 $85,946 $91,873 $97,800 Low $32,415 $34,730 $37,046 $41,676 $46,307 $48,159 $50,012 $53,716 $57,421 $61,125 1.8% 0.00% Very Low $19,449 $20,838 $22,227 $25,006 $27,784 $28,896 $30,007 $32,230 $34,452 $36,675 Region 5 Median $57,050 $61,125 $65,200 $73,350 $81,500 $84,760 $88,020 $94,540 $101,060 $107,580 Burlington, Camden and Gloucester Moderate $45,640 $48,900 $52,160 $58,680 $65,200 $67,808 $70,416 $75,632 $80,848 $86,064 Low $28,525 $30,563 $32,600 $36,675 $40,750 $42,380 $44,010 $47,270 $50,530 $53,790 1.8% 0.00% Very Low $17,115 $18,338 $19,560 $22,005 $24,450 $25,428 $26,406 $28,362 $30,318 $32,274 Region 6 Median $51,085 $54,734 $58,383 $65,681 $72,979 $75,898 $78,817 $84,656 $90,494 $96,332 Atlantic, Cape May, Cumberland and Salem 1 Person *1.5 Person 2 Person *3 Person 4 Person *4.5 Person 5 Person 6 Person 7 Person 8 Person Moderate $40,868 $43,787 $46,707 $52,545 $58,383 $60,719 $63,054 $67,725 $72,395 $77,066 Low $25,543 $27,367 $29,192 $32,841 $36,490 $37,949 $39,409 $42,328 $45,247 $48,166 1.8% 0.00% Very Low $15,326 $16,420 $17,515 $19,704 $21,894 $22,769 $23,645 $25,397 $27,148 $28,900 Max. Increase** Moderate income is between 80 and 50 percent of the median income. Low income is 50 percent or less of median income. Very low income is 30 percent or less of median income. Rents Sales Regional Asset Limit*** $163,245 $173,844 $199,936 $174,209 $151,043 $136,680 * These columns are for calculating the pricing for one, two and three bedroom sale and rental units as per N.J.A.C. 5:80-26.4(a). ** This column is used for calculating the pricing for resale and rent increases for units as per N.J.A.C. 5:97-9.3. However, low income tax credit developments may increase based on the low income tax credit regulations. Landlords who did not increase rent in 2012 may increase rent by the combined 2012 and 2013 increase, or 3 percent. *** The Regional Asset Limit is used in determining an applicant's eligibility for affordable housing pursuant to N.J.A.C. 5:80-26.16(b)3. Since the COAH Regional Income Limits for 2013 were higher than 2014 figures, the 2013 income limits, shown above, will remain in force for 2014 and until Regional Income Limits surpass the 2013 Regional Income Limits. 5
Problem #1: Insufficient decent housing affordable to low and moderate income households and individuals Types of Households and Individuals Housing Types Families Seniors Individuals and families with special needs People living in substandard housing New (rental and homeownership) Rehabilitated Supportive housing 6
Two ways to define and quantify housing needs: 1. Calculate and project present and future costburdened households and individuals, i.e., paying more than 30% of income for housing 2. Project future housing needs for a selected projection period (target year) for target beneficiary groups, i.e., low and moderate income households 7
Some facts on cost-burden (>30% of income for housing costs) : 42% of all 3.1 million NJ households cost-burdened (2011) 72% of NJ renters costburdened (2013) 74% of NJ low and moderate income households costburdened, i.e., 875,310 households (2011) 82% of NJ low income households cost-burdened, i.e., 611,180 households Sources: ACS 2007-2011, Data source: HUD CHAS User Inquiry Tool, retrieved September 26, 2014, http://www.huduser.org/portal/datasets/cp/chas/data_querytool_chas.html 8 NJ CHAS 2013 (2009 data) Joint Center for Housing Studies of Harvard University, State of the Nation s Housing 2014
Why consider cost-burden? Spending a disproportionate share of income on housing stifles economic growth as these households restrict their spending. * Cost-burden forces households to make tradeoff between housing quality (location/opportunity) and cost CAVEAT: Appellate Division rejected including cost-burdened low and moderate income households as part of present need under Mount Laurel and the Fair Housing Act (2007)** Sources: *Center for Housing Policy, 2014 **In re N.J.A.C. 5:94 and 5:95, 390 N.J. Super 1 (2007) 9
Cost-burden and affordable housing needs in the future: Rapid increase in cost-burdened seniors anticipated as baby boom ages, increasing demand for market rate and assisted housing, particularly rentals 2 million + assisted rentals in US at risk of expiring affordability controls, mostly LIHTC units It is hardly hyperbole to call the growing lack of rental affordability a crisis. * Source: *Joint Center for Housing Studies of Harvard University, State of the Nation s Housing 102014
Rehabilitation Housing Need in New Jersey: 62,859 units built pre-1960 occupied by low and moderate income households need rehabilitation, COAH-Rutgers (2014) 40,628 units built pre-1940 occupied by low and moderate income need rehabilitation, COAH-Rutgers (2004), reduced to Rehabilitation Share of 24,847 units 54% increase in need 2000-2010 NOTE: 20,000 LMI units rehabilitated (includes RCA-funded) under MtL/COAH since 1980 11
Low and Moderate Income Prospective Housing Need Projections for New Jersey, 1978-2014 Affordable Housing Need Type DCA, 1978 Rutgers, 1983 Court, 1984 COAH- Rutgers, 1986 COAH- Rutgers, 1994 COAH- Rutgers, 2004 COAH- UPenn& Econsult, 2008 COAH- Rutgers, 2014 New Housing Units Needed 331,353 15,601 203,113 65,093 77,580 52,726 115,666 30,788 Projection Period (years) 20 10 10 6 12 15 19 10 New Housing Units Needed Per Year (annualized over the projection period) 16,568 1,560 20,311 10,849 6,465 3,515 6,068 3,078 Source: prepared by David N. Kinsey, FAICP, PP, September 30, 2014, based on NJ DCA, Superior Court, and COAH documents. 12
COAH-Rutgers Prospective Need Projection Methodology 13
Source: FSHC, received from COAH & Rutgers in response to OPRA requests, 2014 14
Source: FSHC, received from COAH & Rutgers in response to OPRA requests, 2014 15
Source: Source: FSHC, FSHC, received received from from COAH COAH & Rutgers & Rutgers in response in response to OPRA to OPRA requests, requests, 2014 2014 16
2014-2024 Need 1987-2014 Need Source: FSHC, received from COAH & Rutgers in response to OPRA requests, 2014 17
Regional Low and Moderate income Housing Prospective Need in New Jersey, 1999-2024 (FSHC-K&H, 2014) COAH Housing Region Housing Units Affordable to Low and Moderate Income Households Household Under 65 Household 65+ Total 0 13,705 22,313 36,018 2 16,544 22,397 38,941 3 10,898 23,645 34,542 4 11,277 28,750 40,028 5 8,275 25,353 33,629 6 8,149 9,422 17,571 Total 68,849 131,880 200,728 Prepared by: David N. Kinsey, FAICP, PP, October 16, 2014 18
Low and Moderate Income Prospective Housing Need Projections for New Jersey, Using "Prior Round Methodology," 1986-2014 Affordable Housing Need Type COAH- Rutgers, 1986 COAH- Rutgers, 1994 COAH- Rutgers, 2014 FSHC-K&H, 2014 New Housing Units Needed 65,093 77,580 30,788 200,728 Projection Period (years) 6 12 10 25 New Housing Units Needed Per Year (annualized over the projection period) 10,849 6,465 3,078 8,029 Source: prepared by David N. Kinsey, FAICP, PP, October 2014, based on COAH documents and FSHC comments to COAH, 2014 19
Problem #2: Insufficient variety and choice of housing, including housing affordable to low and moderate income households Exclusionary zoning does not permit a full range of housing types, e.g., townhouses, apartments, and small lot detached houses, consistent with diverse housing needs and desires, and thereby limits the available housing choices Mount Laurel I (1975) standard, but refocused in Mount Laurel II (1983) Lack of variety and choice has fueled and reinforced the continuing de facto segregation of NJ communities and schools by race and class Source: Orfield and Luce, New Jersey Metropatterns, 2003 20
2. What are some alternatives? Basic question: What types of interventions by state and/or regional agencies in local land use planning and regulation, including zoning, and housing markets can best increase the supply of low and moderate income housing? Scope of interventions: comprehensive or limited? 21
Intervention Alternatives 1. Identical statewide goal(s) for all municipalities, e.g., identical percentage of local year-round housing stock required to be affordable, otherwise stymied inclusionary developers may seek state override of local barriers that impede inclusionary projects (MA, CT, RI, IL) 2. Mandatory inclusionary zoning (none statewide, rather local governments, e.g., Montgomery County, MD and NYC) 3. Fair share mandate, with allocations to all municipalities of projected housing needs and/or affordable housing obligations (NJ, CA, MN, OR) 4. Mandatory housing element in municipal master plan, addressing housing needs, with and without review and approval by higher level of government (NJ, CA, OR, FL, WA) 5. Growth-based inclusionary mandate (NJ) 6. Mandated housing type diversity in local master plans and zoning, which may not advance affordable housing production (PA) 7. Mandatory development fees dedicated to affordable housing programs (NJ) 8. Incentives for specific housing types and/or fair share compliance (NJ, MN) Source: modified and expanded from Bratt, 2014 22
New Jersey Models COAH First and Second Round Rules, 1987-1999 (fair share mandate, mandatory housing element, development fees, incentives) COAH Third Round Rules, 2004 and 2008 iterations (fair share mandate, growth share, mandatory housing element, development fees, incentives) S.1, passed Senate, June 10, 2010 (identical statewide goal, mandatory IZ, mandatory housing element, development fees) A.3447/S.1, passed both houses of Legislature January 10, 2011, conditionally vetoed January 25, 2011 (identical statewide goal, mandatory IZ, mandatory housing element, development fees) Conditional veto of A.1907 (non-residential development fee moratorium extension), September 10, 2014 (restores S.1) 23 Source: modified and expanded from Bratt, 2014
3. What principles should guide choosing NJ s new approach? Fairness Transparency Enforceability Simplicity Effectiveness Constitutional 24
Mount Laurel II Principles 1. All municipalities and state agencies exercising land use regulation 2. Indigenous need 3. Prospective need 4. Need determined by region 5. Municipal fair share of regional present and prospective need 6. Affordable to low and moderate income households (<80% of regional median income) 7. Realistic opportunity for construction of fair share 8. Affirmative responsibility of municipalities 9. Objective compliance standard 10. Judgment of repose if compliant (res judicata) 11. Builder s remedy as enforcement mechanism 25
What Affordable Housing Policies Make Sense for New Jersey? 4. What makes sense for NJ in 2014? Total Affordable Units Produced Under The Fair Housing Act SUSSEX PASSAIC BERGEN MORRIS WARREN ESSEX HUDSON UNION Completed Units By Municipality HUNTERDON SOMERSET More than 750 MIDDLESEX 500-750 MERCER 200-500 MONMOUTH 100-200 25-100 Less than 25 0 BURLINGTON OCEAN CAMDEN GLOUCESTER SALEM ATLANTIC CUMBERLAND CAPE MAY µ New Jersey Department of Community Affairs 101 South Broad Street Trenton, New Jersey 08625 Date: Jaunary 6, 2012 Graphic Scale 0 15 30 60 Miles Data Sources: NJDEP, NJDCA 26
Recall that the Prior Round system worked: Total New Affordable Housing Units Built in New Jersey, 1980-2012 Housing(Type units % Supportive and Special Needs Housing (bedrooms) 12% Accessory Apartments 0% Assisted Living Facilities 2% Other 1% Total(New(Affordable(Housing(Units(Built(in(New(Jersey,(198082012 100%(Affordable8Municipally(Sponsored(Units (((((((( 34,408 57% Affordable(Units(in(Inclusionary(Developments (((((((( 17,080 28% Supportive(and(Special(Needs(Housing((bedrooms) ((((((((((( 7,285 12% Accessory(Apartments (((((((((((((( 111 0% Assisted(Living(Facilities ((((((((((( 1,146 2% Other (((((((((((((( 716 1% Total (((((((( 60,746 100% Source:(Data(recorded(by(municipalities(in(an(electronic(tracking(and(monitoring(system(and(reported(to(NJ( DCA,(by(email(from(NJ(DCA,(Local(Planning(Services,(March(29,(2012. Note:(NJ(DCA(reports(an(additional(3,806(new(affordable(housing(units(were(built(with(funding(under(regional( contribution(agreements Prepared(by(David(N.(Kinsey,(FAICP,(April(23,(2012 Affordable Units in Inclusionary Developments 28% 100% Affordable- Municipally Sponsored Units 57% Notes: Low Income Housing Tax Credit production of 27,000 affordable rental units, most 100% affordable, in 500+ projects since 1986 Overlap of LIHTC production with 34,408 affordable units in 100% affordable developments counted by COAH Total housing built in NJ 1983-2013 = 766,553 (est.) 27
If it ain t broke, don t fix it Bert Lance, Director, Office of Management and Budget under President Carter, 1977 28
A proposal: 1. Update fair share methodology, e.g., Highlands, redevelopment factor, etc. 2. Make fair share data and calculations transparent; use the Web 3. Make explicit the policy choices in the methodology and their implications 4. Continue to rehabilitate substandard housing 5. Focus on rentals 6. Focus on families 7. Focus on supportive housing 8. Resist temptation to concentrate on seniors, not withstanding the projected need 9. Begin to address variety and choice 10. Grow the economy by making NJ a more affordable, diverse, and welcoming community 29
Thanks. Questions? 30